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Sensex, Nifty bounce back on Wednesday
Feb-20-2019

Indian equity bourses bounced back on Wednesday to end the trading session with strong gains of over a per cent. The start of day was a fabulous, aided by Care Ratings’ report that signalling an end to the liquidity crisis that NBFCs have been facing since last September, corporate bond issuances by them have risen by 30% in January, reflecting renewed confidence among both issuers as well as investors. Trading sentiments also got boost, after Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu cleared a proposal aiming at simplifying the process of exemptions for Start-ups under Section 56 (2) (viib) of Income Tax Act, which will encourage investments in Start-Ups. Adding comfort among traders, the government said the revised GDP figures for demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18.

In the last leg of the trade, the key indices extended gains to settle near their intraday high points, tracking positive global markets. Street got encouragement as the Cabinet approved a new electronics policy which aims to create a $400 billion electronic manufacturing ecosystem by 2025 and generate 1 crore jobs in the country. The National Electronics Policy 2019 proposes to boost mobile manufacturing in the country to 1 billion units worth $190 billion of which 600 million units worth $110 billion will be exported from the country. Investors paid no heed towards report that Foreign Direct Investment (FDI) equity inflows to India from April to December 2018 declined by seven per cent. The latest figures released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed that India managed to attract almost $33.5 billion from April to December 2018. In the same period in 2017, India’s FDI equity flows stood at almost $36 billion. Street even overlooked a private report stating that despite the almost loose fiscal and monetary policies, the economy is likely to slow down to 6-6.5 percent in the first half of 2019, due to weak global demand, political uncertainty and tighter financial conditions.

On the global front, European markets were trading in green, as Germany's investor confidence improved further to its highest level in five months in February. The survey data from the ZEW - Leibniz Centre for European Economic Research showed that the ZEW Indicator of Economic Sentiment for Germany rose to -13.4 points from -15.0 points in January. Asian markets ended in green after US President Donald Trump said the US-China trade talks are going very well and added that an early March deadline to reach a deal could be postponed. Investors also awaited the minutes of the Federal Reserve's January policy meeting for clues on policymakers' thinking on interest rates and its balance sheet reduction policy.

Back home, airline stocks ended higher after domestic air passenger count has gone up by 9.10% in the month of January 2019. According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 125.08 lakh passengers in January 2019, as against 114.65 lakh passengers carried in the same month of last year. However, stocks related to the tourism sector ended lower, despite the Union Cabinet, chaired by the Prime Minister Narendra Modi approved Swadesh Darshan Scheme: Integrated Development of Theme-based Tourist Circuits in the country. The scheme enhances the tourist attractiveness in a sustainable manner by developing world class infrastructure in the circuit/destinations.

Finally, the BSE Sensex gained 403.65 points or 1.14% to 35,756.26, while the CNX Nifty was up by 131.10 points or 1.24% to 10,735.45.

The BSE Sensex touched a high and a low of 35,797.11 and 35,469.49, respectively and there were 27 stocks advancing against 04 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.91%, while Small cap index up by 0.84%.

The top gaining sectoral indices on the BSE were Metal up by 2.99%, Basic Materials up by 2.24%, Oil & Gas up by 2.19%, PSU up by 1.90% and Utilities up by 1.78%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Vedanta up by 4.67%, Tata Steel up by 4.13%, ONGC up by 3.63%, NTPC up by 2.85% and Yes Bank up by 2.57%. On the flip side, Hero MotoCorp down by 0.56%, Hindustan Unilever down by 0.30%, Bajaj Auto down by 0.16% and Indusind Bank down by 0.08% were the top losers.

Meanwhile, Global Rating agency Standard and Poor's (S&P) in latest report titled 'Indian Corporate 2019 Outlook - Time For Caution' has stated that revenue growth of rated Indian corporates is likely to slow down over the next 12-24 months. It also said that India's central government elections this year may pose additional risks for Indian corporates. It also noted that a change of administration may trigger expansionary government spending which may push up borrowing costs or even raise inflation.

According to the report, global risks such as stability of commodity prices as well as demand from the US and China will have a greater impact on the fortunes of Indian companies than domestic demand in the next year or two. It added that the revenue environment for rated corporates is facing increasing global risks such as China's slowdown, trade war escalation or a disorderly Brexit.

However, the rating agency said that the performance of Indian companies should remain stable, given low costs, capacity expansion, and benign input prices. It also noted that with the exception of telecom, growth in other sectors in India has been accompanied by margin stability and it expects that this trend to continue.
The CNX Nifty traded in a range of 10,752.70 and 10,646.40. There were 44 stocks advancing against 06 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 6.14%, Tata Steel up by 4.83%, Vedanta up by 4.64%, Adani Ports & SEZ up by 4.43% and Hindalco up by 3.94%. On the flip side, Dr. Reddy’s Lab down by 0.35%, Hero MotoCorp down by 0.30%, Hindustan Unilever down by 0.11%, Zee Entertainment down by 0.10% and IndusInd Bank down by 0.08% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 6.37 points or 0.09% to 7,185.54, France’s CAC added 4.06 points or 0.08% to 5,164.58 and Germany’s DAX was up by 41.82 points or 0.37% to 11,351.03.

Asian markets ended in green on Wednesday, with encouraging US earnings and hopes for a US-China trade deal boosting sentiment. Chinese shares closed higher after US President Donald Trump told reporters the US-China trade talks are ‘going very well’ and added that an early March deadline to reach a deal could be postponed. Trump claimed China is ‘trying to move fast’ so that an increase in tariffs on Chinese goods currently set to take effect does not happen. Further, Japanese shares hit fresh nine-week high, with automakers and heavyweight SoftBank Group pacing the gainers despite the release of weak exports data. Report showed exports in Japan fell the most in more than two years in January as machinery goods orders fell sharply.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,761.22
5.57
0.20

Hang Seng

28,514.05
285.92
1.01

Jakarta Composite

6,512.78
18.11
0.28

KLSE Composite

1,726.18

19.62

1.15

Nikkei 225

21,431.49
128.84
0.60

Straits Times

3,278.38
18.58
0.57

KOSPI Composite

2,229.76
24.13
1.09

Taiwan Weighted

10,272.46
120.20
1.18
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